Economic Outlook

Services is Malawi’s dominant economic sectors contributing 55.9% of GDP followed by agriculture and industry which make up 28.6% and 15.6% of GDP respectively. Trade in goods and services also plays an essential role in economic growth and development, contributing about 65% of GDP in 2017. The economy is expected to grow by 5% – 5.5% in 2018-2019, showing a sign of improvement after weak growth due to the flooding of 2014/2015 and the drought of 2015/2016. 

Malawi’s year on year inflation dropped considerably, from 218 in 2016 to 12.3 in 2017, owing mainly to a decline in food price inflation. The stabilisation in the Malawi kwacha against the U.S. dollar also helped to steady non-food prices, contributing to lowering inflation.The government of Malawi has undertaken measures to tighten fiscal discipline to reduce public debt, which stood at 54% of GDP in 2017 as well as and improve accountability and transparency in public financial management systems. Priority has also been given to stabilise the financial sectors as the government looks to strengthen the capitalisation of banks. However, the financial sectors remain open to high concentration risk because of the country’s limited number of large creditworthy borrowers.

Potential Opportunities

Despite the vulnerability of Malawi’s economy to external shocks, the country provides many opportunities for business. With a population of 19.17 million in 2017 that is expected to grow to 20.29 million in 2019, a GDP of US$6.26 billion in 2017, which is expected to increase to about US$7.117 billion in 2019 and a GDP per capita income of US$326.61 in 2017, projected to rise to US$350.76 by 2019, Malawi provides a growing market for exporters and investors, especially for consumer products, production inputs and machinery.

Although the country’s volume of exports of goods and services is expected to decrease from 14.28.22% in 2017 to about 5.97 % in 2019, its volume of imports of goods and services is expected to increase from -3.03% in 2017 up to 4.19% in 2019, indicating growth in imports. Despite its small domestic market and decline in export performance, the country has opportunities for export diversification to neighbouring South Africa, SADC, COMESA, Africa, the UK, the EU and the US market under Africa Growth Opportunity Act (AGOA).

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